Why you should consider investing in REITs as opposed to buying a home

Why you should consider investing in REITs as opposed to buying a home

Investing in Vesta real estate is beneficial in that you can earn high returns from it. You, however, do not have to be a homeowner for you to benefit from this investment. Buying a home comes with high down payments and conditions especially when you are applying for a mortgage. You have to have a high credit score and a good history for the lender to consider you for a loan.

With real estate investment trust, you don’t have to go through such challenges. This is a special kind that includes aspects of investment and regular stock. It gives you a chance to earn returns without having to commit too much.

Making financial commitments

REITs allow you to invest even with a low financial commitment. Like regular stocks, REITs are traded publicly meaning you can buy into it using your brokerage account from any brokerage. You can start by purchasing a single share for the market rate and the required commission. This is a cheaper option than investing in real estate directly.

Most investors also wear the hat of being landlords. The title comes with challenges such as having to deal with problematic tenants or solving issues within the property. Some avoid these challenges by hiring property managers, but this comes with additional costs. You also have the opportunity to invest in out of state property.

Maintaining costs

Maintenance costs are also a challenge for such investors. This is not the same for REIT investors. You will not incur the costs of repairs or hiring property managers when investing in REITs. You can, therefore, make a lot of money from properties without dealing with such problems.

Real estate investors often overlook the cost of repairs and maintenance. These costs can make you not earn adequate profits from your property. Buying property not only comes with a high price point but it also lacks diversification. With REITs, you can own different properties, thus diversifying your portfolio making it easy for you to get profits from different units.

Understand your rights

REITs are somehow similar to regular stocks, but they come with attractive rules. They distribute most of the taxable income to the shareholders in the form of dividends. Regular stocks do not pay dividends to shareholders; thus, REITs are more profitable than them.

It is also easy to buy a REIT compared to purchasing real estate property. Buying property involves input from a lot of people including agents, accountants, attorneys, and realtors. All these parties have to be paid to offer their services. Buying a REIT, on the other hand, is similar to purchasing a stock which involves a simple process. You can easily invest in REITs within minutes using your phone as long as you have some money in your account.

REIT investing also involves fewer risks compared to that of investing in property directly. It saves times, money and gives you the opportunity to get big returns within a short period. Therefore, if you are considering investing in real estate for the first time, purchase a REIT. You will enjoy the process and have peace of mind.